BoE Holds Interest Rate as Energy Prices Surge in Britain

The Bank of England (BoE) has decided to keep its benchmark interest rate unchanged at 3.75 percent, despite rising global energy prices pushing up inflation in Britain.

According to the BoE, global energy prices have increased significantly since the July Monetary Policy Report and remain volatile. Spot prices of Brent crude and British wholesale gas have risen by 36 percent and 78 percent respectively since the period leading up to the July Report.

The bank's decision was made after data released by the Office for National Statistics showed that Britain's consumer price index (CPI) rose 3.1 percent year-on-year in August, up from 2.9 percent in July.

Andrew Bailey, governor of the BoE, noted that higher global energy costs have had a limited effect on price and wage-setting in Britain so far, but warned that 'the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise bank rate to ensure that inflation falls back to our 2 percent target.'